TSMC Grows Share of Foundry Business
TAIPEI — Taiwan Semiconductor Manufacturing Co. (TSMC) increased its share of the foundry business to 55 percent this year on better than expected demand for smartphones during the third quarter.
“In the third quarter, we gained market share across most technology nodes,” according to TSMC Co-CEO Mark Liu, speaking at a Taipei event to announce the company’s quarterly results.
TSMC, which counts Apple as its largest buyer, said that sales growth was driven by its mobile customer’s new product launch. TSMC makes the A10 processor for Apple’s latest smartphone, the iPhone 7 Plus, introduced in September.
In the third quarter, TSMC’s sales of chips made with its most advanced 16nm/20nm process technology increased to 31 percent of overall revenue from 23 percent during the second quarter. The quarter marks the first time for 16nm/20nm to account for the largest portion of its overall revenue.
The company’s previous cash cow, 28nm technology, dropped to 24 percent of its total wafer revenue from 28 percent in the second quarter. TSMC said it expects demand for 28nm to continue to be strong and last for many years as it extends the technology into low-cost and more versions for automotive and other applications. Up to now, few of TSMC’s rivals have made a dent in the company’s market share in 28nm.
TSMC said it expects to outperform the overall semiconductor industry this year as the foundry segment continues to lead growth. The company said that in US dollar terms, its sales will grow by about 10 percent in 2016 while the foundry segment increases 9 percent and total industry revenue, excluding memory, gains by 1 percent.
TSMC is likely to benefit from stronger than expected demand for the iPhone 7 Plus after Samsung was forced this month to halt production of its high-end Galaxy Note 7 smartphones because of exploding batteries. The Galaxy Note 7, selling for a retail price of about $800, was positioned to compete head to head with the iPhone 7 Plus.
TSMC said it expects its silicon content in smartphones for low, mid and high-end customers to increase to an average of $10 per unit next year from slightly more than $9 per phone this year.
In the third quarter this year, TSMC transferred 10nm development from R&D to production and has five tape outs lined up for mobile products. The first commercial shipments of 10nm products are scheduled for the first quarter next year. The company predicted that high-end smartphones will move to 10nm from 16nm during 2017.
TSMC reiterated that it is on schedule for 7nm with risk production planned for the first quarter of 2017 and 15 customer tape outs lined up for the full year. The company said that customers in high-end mobile and high-performance computing are on board to adopt the new technology.
The company said that it has entered the technology development phase for 5nm.
TSMC expects mobile products and high-performance computing to drive growth of 7nm and 5nm. The company said 7nm will ramp in 2017, followed by 5nm in 2019 to support smartphones and high-end mobile products with new features including virtual reality and augmented reality.
The company expects the high-performance computing market to be worth $15 billion in the next five years as more machines used in healthcare, media, consumer and automotive applications gain the ability to see, hear and predict. TSMC said that it expects high-performance computing to account for the largest portion of its business within the next five years, replacing mobile devices.
TSMC said that it expects its capital expenditure for this year to come in at more than $9.5 billion, the low end of an earlier forecast range of $9.5 billion to $10.5 billion. The company said it is keeping capex low because improved cycle time has helped to boost capital efficiency.
The company is expected to have the second-largest capex in the semiconductor industry this year, following Samsung and slightly more than Intel.
—Alan Patterson covers the semiconductor industry for EE Times. He is based in Taiwan.
source: EE Times (www.eetimes.com)